Indonesian Palm Oil Industry Explores New Markets Amid US Tariff Uncertainty
The Indonesian palm oil sector, known as the world’s leading supplier, is currently facing challenges due to potential losses from US tariffs. Industry leaders have revealed that companies are actively seeking new markets in Europe, Africa, and the Middle East to offset the impact of the tariffs.
Although there has been a temporary 90-day pause in the implementation of the 32% tariffs, which has greatly affected Indonesia’s palm oil exports, the industry is taking proactive steps to ensure long-term stability.
Chairman of the Indonesian Palm Oil Association (GAPKI), Eddy Martono, sees the tariff pause as an opportunity for negotiation but emphasizes the importance of diversifying the market. The US is a major importer of Indonesian palm oil, consuming 2.5 million tonnes in 2023. The concern lies in maintaining the country’s 89% market share, especially with Malaysian competitors facing lower tariffs.
To address the potential impact of the tariffs, Indonesia is considering expanding its exports to regions like Egypt, the Middle East, Central Asia, and Eastern Europe. Finance Minister Sri Mulyani has taken steps to reduce export taxes on crude palm oil to increase competitiveness. However, concerns remain among the 2.5 million smallholder farmers about the long-term consequences.
Mansuetus Darto, chairman of the Palm Oil Farmers Union (SPKS), has cautioned that without a trade agreement, issues such as overcapacity and harvesting challenges may arise in the industry.
President Prabowo Subianto is actively engaging in negotiations with the US, including sending a delegation to Washington and exploring opportunities for increased purchases of US liquefied natural gas and petroleum gas to balance trade.
While the industry is hopeful for a positive outcome with the US, there is a readiness to shift focus to alternative markets if necessary. The temporary pause in tariffs presents an opportunity for negotiation, which the Indonesian government is urged to leverage to its advantage.
